Government levies a tax on income generated by individuals and entities which is known as Income Tax. It is a legal duty of taxpayers to submit ITR (Income Tax Return) annually on time. Amount collected through income taxes are a source of revenue for government which is further used to develop public infrastructure, roads, schools, defence, payment of the salaries of the government employees etc.

The income tax is levied on individuals and businesses on the basis of a predetermined tax slab. These income tax slabs are categorized based on the age bracket, income amount and type of income. The tax rates keep increasing with an increase in the income slab. The tax slabs are revised during every budget. The individual taxpayers cab be categorized into three different groups:

1) Individuals and Hindu Undivided Family (HUF) (Below 60 years of age)
2) Senior Citizens (60 years and above but below 80 years of age)
3) Super Senior Citizens (80 years and above)

Income Tax Slabs FY 2018-19 for Individuals and Hindu Undivided Family (HUF)

Part I - Less Than 60 Years Old
Income Tax Rates Health and Education Cess
Up to Rs 2.5 lakh* Nil Nil
Above Rs 2.5 lakh to Rs 5 lakh 5% 4% of Income Tax
Above Rs 5 lakh to Rs 10 lakh 20% 4% of Income Tax
Above Rs 10 lakh 30% 4% of Income Tax

Surcharge: 10% of income tax, where the total income exceeds Rs 50 lakh up to Rs 1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs 1 crore.

*Income tax exemption limit for FY 2018-19 is up to Rs 2,50,000 for individual & HUF other than those covered in Part(II) or (III)

Part II - 60 Years and Above but Less than 80 Years
Income Tax Rates Health and Education Cess
Up to Rs 3 lakh* Nil Nil
Above Rs 3 lakh to Rs 5 lakh 5% 4% of Income Tax
Above Rs 5 lakh to Rs 10 lakh 20% 4% of Income Tax
Above Rs 10 lakh 30% 4% of Income Tax

Surcharge: 10% of income tax, where the total income exceeds Rs 50 lakh up to Rs 1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs 1 crore.

*Income tax exemption limit for FY 2018-19 is up to Rs 3,00,000 other than those covered in Part(I) or (III)

Part III - 80 Years and Above
Income Tax Rate Health & Education Cess
Up to Rs 5 lakh Nil Nil
Above Rs 5 lakh to Rs 10 lakh 20% 4% of Income Tax
Above Rs 10 lakh 30% 4% of Income Tax

Surcharge: 10% of income tax, where the total income exceeds Rs 50 lakh up to Rs 1 crore.
Surcharge: 15% of income tax, where the total income exceeds Rs 1 crore.

*Income tax exemption limit for FY 2018-19 is up to Rs 5,00,000 other than those covered in Part(I) or (II)

Part IV - Income Tax Slabs for Domestic Companies for FY 2018-19
Turnover Particulars Tax Rate
Gross turnover upto Rs 250 Crore in the previous year 25%
Gross turnover exceeding Rs 250 Crore in the previous year 30%

Cess: 4% of corporate tax
Surcharge: If taxable income is more than Rs 1 crore but less than Rs 10 crore: 7%
Surcharge: If taxable income is more than Rs 10 crore: 12%

Income Tax Slabs on Dividend
Dividend Source Tax Rate for Individuals/HUFs Income Tax Section
If the average dividend income earned over the year does not exceed Rs 10 lakh Nil Section 10(34)
If the average dividend income received during the year exceeds Rs 10 lakh 10% Section 115BBDA

Income Tax Slab For Non-Resident Indians (NRIs) for FY 2018-19
Income Tax Rate
Up to Rs 2.5 lakh Nil
Above Rs 2.5 lakh to Rs 5 lakh 5%
Above Rs 5 lakh to Rs 10 lakh 20%
Above Rs 10 lakh 30%
*Health and Education Cess - 4%

Income Tax Slab for Expats for FY 2018-19
Income Tax Rate
Up to Rs 2.5 lakh Nil
Above Rs 2.5 lakh to Rs 5 lakh 5%
Above Rs 5 lakh to Rs 10 lakh 20%
Above Rs 10 lakh 30%

Income Tax Slab for Freelancers
Income Tax Rate
Up to Rs 2.5 lakh Nil
Above Rs 2.5 lakh to Rs 5 lakh 5%
Above Rs 5 lakh to Rs 10 lakh 20%
Above Rs 10 lakh 30%

Additionally Surcharge levied
Income Tax Rate
Above Rs 50 lakh but less than Rs 1 crore 10% of the income tax
Above Rs 1 crore 15% of the income tax (applicable on amounts that are higher than Rs. 1 crore)

Health and Education Cess: 4%

Income Tax Slab for Pensioners
Income Tax Rate Health & Education Cess
Up to Rs 3 lakh Nil Nil
Above Rs 3 lakh to Rs 5 lakh 5% 4% of Income Tax
Above Rs 5 lakh to Rs 10 lakh 20% 4% of Income Tax
Above Rs 10 lakh 30% 4% of Income Tax

Surcharge Levied
Income Tax Rate
Above Rs 50 lakh but less than Rs 1 crore 10% of the income tax
Above Rs 1 crore 15% of the income tax (applicable on amounts that are higher than Rs 1 crore)
*Exemption limit: Up to Rs 3 lakh for FY 2018-19

Income Tax Exemptions

Though government levies tax on all kind of income and profits generated by individuals and businesses, it also offers various exemptions. If any individual spends money on the prescribed investment schemes ruled by the Income Tax Law, he/she becomes eligible to claim an exemption on that investment. The individuals can claim exemption of a certain amount of money spent on medical insurance, child's education, ELLS funds, tax saving bonds, FDs, Pension Funds etc.